BILL NUMBER: AB 1016	CHAPTERED  09/14/00

	CHAPTER   438
	FILED WITH SECRETARY OF STATE   SEPTEMBER 14, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 13, 2000
	PASSED THE ASSEMBLY   AUGUST 24, 2000
	PASSED THE SENATE   AUGUST 23, 2000
	AMENDED IN SENATE   AUGUST 14, 2000
	AMENDED IN SENATE   JANUARY 4, 2000
	AMENDED IN ASSEMBLY   MAY 19, 1999
	AMENDED IN ASSEMBLY   APRIL 21, 1999

INTRODUCED BY   Assembly Member Briggs

                        FEBRUARY 25, 1999

   An act to add and repeal Sections 7099.1 and 21028 of the Revenue
and Taxation Code, and to add and repeal Section 13019 of the
Unemployment Insurance Code, relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1016, Briggs.  Confidentiality:  taxpayer communications.
   Under existing law, the Employment Development Department, the
State Board of Equalization, and the Franchise Tax Board administer
various taxes and fees.
   This bill, in modified conformity to federal income tax laws,
would, with respect to tax advice, provide that certain protections
that apply to a communication between a client and an attorney also
apply to a communication between a taxpayer and any federally
authorized tax practitioner before the aforementioned state agencies
to the extent the communication would be considered a privileged
communication if it were between a client and an attorney, as
provided.  These provisions would be repealed on January 1, 2005.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 7099.1 is added to the Revenue and Taxation
Code, to read:
   7099.1.  (a) (1) With respect to tax advice, the protections of
confidentiality that apply to a communication between a client and an
attorney, as set forth in Article 3 (commencing with Section 950) of
Chapter 4 of Division 8 of the Evidence Code, shall also apply to a
communication between a taxpayer and any federally authorized tax
practitioner to the extent the communication would be considered a
privileged communication if it were between a client and an attorney.

   (2) Paragraph (1) may only be asserted in any noncriminal tax
matter before the State Board of Equalization.
   (3) For purposes of this section:
   (A) "Federally authorized tax practitioner" means any individual
who is authorized under federal law to practice before the Internal
Revenue Service if the practice is subject to federal regulation
under Section 330 of Title 31 of the United States Code, as provided
by federal law as of January 1, 2000.
   (B) "Tax advice" means advice given by an individual with respect
to a state tax matter, which may include federal tax advice if it
relates to the state tax matter.  For purposes of this subparagraph,
"federal tax advice" means advice given by an individual within the
scope of his or her authority to practice before the federal Internal
Revenue Service on noncriminal tax matters.
   (C) "Tax shelter" means a partnership or other entity, any
investment plan or arrangement, or any other plan or arrangement if a
significant purpose of that partnership, entity, plan, or
arrangement is the avoidance or evasion of federal income tax.
   (b) The privilege under subdivision (a) shall not apply to any
written communication between a federally authorized tax practitioner
and a director, shareholder, officer, or employee, agent, or
representative of a corporation in connection with the promotion of
the direct or indirect participation of the corporation in any tax
shelter, or in any proceeding to revoke or otherwise discipline any
license or right to practice by any governmental agency.
   (c) This section shall be operative for communications made on or
after the effective date of the act adding this section.
   (d) This section shall remain in effect only until January 1,
2005, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2005, deletes or extends
that date.
  SEC. 2.  Section 21028 is added to the Revenue and Taxation Code,
to read:
   21028.  (a) (1) With respect to tax advice, the protections of
confidentiality that apply to a communication between a client and an
attorney, as set forth in Article 3 (commencing with Section 950) of
Chapter 4 of Division 8 of the Evidence Code, shall also apply to a
communication between a taxpayer and any federally authorized tax
practitioner to the extent the communication would be considered a
privileged communication if it were between a client and an attorney.

   (2) Paragraph (1) may only be asserted in any noncriminal tax
matter before the Franchise Tax Board.
   (3) For purposes of this section:
   (A) "Federally authorized tax practitioner" means any individual
who is authorized under federal law to practice before the Internal
Revenue Service if the practice is subject to federal regulation
under Section 330 of Title 31 of the United States Code, as provided
by federal law as of January 1, 2000.
   (B) "Tax advice" means advice given by an individual with respect
to a state tax matter, which may include federal tax advice if it
relates to the state tax matter.  For purposes of this subparagraph,
"federal tax advice" means advice given by an individual within the
scope of his or her authority to practice before the federal Internal
Revenue Service on noncriminal tax matters.
   (C) "Tax shelter" means a partnership or other entity, any
investment plan or arrangement, or any other plan or arrangement if a
significant purpose of that partnership, entity, plan, or
arrangement is the avoidance or evasion of federal income tax.
   (b) The privilege under subdivision (a) shall not apply to any
written communication between a federally authorized tax practitioner
and a director, shareholder, officer, or employee, agent, or
representative of a corporation in connection with the promotion of
the direct or indirect participation of the corporation in any tax
shelter, or in any proceeding to revoke or otherwise discipline any
license or right to practice by any governmental agency.
   (c) This section shall be operative for communications made on or
after the effective date of the act adding this section.
   (d) This section shall remain in effect only until January 1,
2005, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2005, deletes or extends
that date.
  SEC. 3.  Section 13019 is added to the Unemployment Insurance Code,
to read:
   13019.  (a) (1) With respect to tax advice, the protections of
confidentiality that apply to a communication between a client and an
attorney, as set forth in Article 3 (commencing with Section 950) of
Chapter 4 of Division 8 of the Evidence Code, shall also apply to a
communication between a taxpayer and any federally authorized tax
practitioner to the extent the communication would be considered a
privileged communication if it were between a client and an attorney.

   (2) Paragraph (1) may only be asserted in any noncriminal tax
matter before the Employment Development Department.
   (3) For purposes of this section:
   (A) "Federally authorized tax practitioner" means any individual
who is authorized under federal law to practice before the Internal
Revenue Service if the practice is subject to federal regulation
under Section 330 of Title 31 of the United States Code, as provided
by federal law as of January 1, 2000.
   (B) "Tax advice" means advice given by an individual with respect
to a state tax matter, which may include federal tax advice if it
relates to the state tax matter.  For purposes of this subparagraph,
"federal tax advice" means advice given by an individual within the
scope of his or her authority to practice before the federal Internal
Revenue Service on noncriminal tax matters.
   (C) "Tax shelter" means a partnership or other entity, any
investment plan or arrangement, or any other plan or arrangement if a
significant purpose of that partnership, entity, plan, or
arrangement is the avoidance or evasion of federal income tax.
   (b) The privilege under subdivision (a) shall not apply to any
written communication between a federally authorized tax practitioner
and a director, shareholder, officer, or employee, agent, or
representative of a corporation in connection with the promotion of
the direct or indirect participation of the corporation in any tax
shelter, or in any proceeding to revoke or otherwise discipline any
license or right to practice by any governmental agency.
   (c) This section shall be operative for communications made on or
after the effective date of the act adding this section.
   (d) This section shall remain in effect only until January 1,
2005, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2005, deletes or extends
that date.
